Updated for tax year 2025.
Do you dread income tax time every year? We get it. But there are some things that can make the tax filing process a little easier to swallow — tax refunds, credits, and deductions! Let’s look at some ways you could save this tax season.
Tax savings opportunities
The tax code offers an array of ways to lower your final tax bill and potentially boost your tax refund. When you’re ready to file your federal tax return, watch for these key tax benefits to receive a bigger tax refund:
Family tax savings
- Child Tax Credit (CTC): TheCTC is worth up to $2,200 per eligible child in 2025 for taxpayers with qualifying dependent children.
- Child and Dependent Care Credit: Parents who work or attend school and pay for childcare may qualify for this tax break. The maximum expenses used to calculate the credit are $3,000 per qualifying dependent or $6,000 for two or more qualifying dependents under the age of 13. The maximum credit for 2025 is $1,050 for one child and $2,100 for two or more children.
- Earned Income Tax Credit (EITC): This credit is available to working taxpayers with low to moderate incomes. The refundable credit amount is based on filing status, the number of qualifying children, and income level. Families with three or more qualifying children could qualify for up to $8,046 in 2025.
College and education tax savings
- Student loan interest deduction: Paying off student loans? You may be able to deduct up to $2,500 in interest paid during 2025, depending on your income.
- Education credits:
- The American Opportunity Tax Credit (AOTC) is worth up to $2,500 per student for post-secondary tuition, fees, and course materials.
- You can also claim the Lifetime Learning Credit (LLC) for tuition and related expenses at eligible institutions after the first four years of post-secondary education expenses.
- Coverdell Education Savings Account: You can contribute a maximum of $2,000 per student in annual contributions that will grow tax-free until withdrawn.
Homeowners tax savings
- Mortgage interest deduction: Homeowners who itemize can use this to deduct up to $750,000 of mortgage interest paid as a single filer or married couple filing jointly (or $375,000 for those married filing separately).
- Property tax deduction: Part of the SALT deduction (state and local taxes), this allows a married couple filing jointly, or single filers, to deduct up to $40,000 (or $ 20,000 if married filing separately). State and local income taxes or sales taxes can also be part of the SALT deduction, but you must itemize to claim this tax break.
- Home office deduction: This deduction can apply to renters as well! It allows people who operate a business to deduct office expenses. The deduction amount is based on the percentage of your home used for operating your business.
Employee tax savings
- No tax on tips deduction: Tipped workers in certain occupations may deduct up to $25,000 in qualified tip income from their taxable income for tax years 2025 through 2028. Certain rules apply; not all tip income qualifies.
- No tax on overtime deduction: Workers may deduct up to $12,500 per year in qualified overtime compensation. Only specific types of overtime pay are eligible; restrictions apply.
- Educator expense deduction: Grade K-12 educators can deduct $300 in out-of-pocket expenses for classroom supplies.
- Qualified transportation benefits: You may be able to exempt employer-provided mass transit and parking benefits from your gross income.
- Work-related education expenses: If you itemize and have paid for work-related education, there’s a deduction for your costs paid minus any employer-reimbursed amount. Only certain individuals qualify (e.g., Armed Forces reservists, qualified performing artists, etc.).
Other tax savings
- Car loan interest deduction: If you finance a brand new car this year, this tax benefit lets you deduct up to $10,000 for interest paid on a qualifying vehicle loan.
- Charitable donation deduction: If you itemize in 2025, you can deduct the cash value of any contributions or donations made to qualified charitable organizations.
The bottom line
Ready to see what tax breaks you qualify for this year? To get started, gather all your tax forms (Form W-2, Form 1099s, Form 1098, etc.), receipts, and a copy of last year’s return. It may be helpful to use a tax preparation checklist to help determine what info you’ll need. Then, e-file with TaxAct® for a simplified filing experience.
If you’re waiting on a refund, we also have a comprehensive income tax refund guide that breaks down every step of receiving your refund.
This article is for informational purposes only and not legal or financial advice.
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